Robert J. Samuelson: Skilled worker shortage mostly a myth

So, what explains more vacancies at given unemployment levels (aka the shifting Beveridge curve)?

The answer almost certainly involves employers, not workers. Businesses have become more risk-averse. They’re more reluctant to hire. They’ve raised standards. For many reasons, they’ve become more demanding and discriminating. These reasons could include (a) doubts about the recovery; (b) government policies raising labor costs (example: the Affordable Care Act’s insurance mandates); (c) unwillingness to pay for training; and (d) fear of squeezed profits. In practice, motives mix.

The chief victims of this shift in business behavior seem to be the long-term unemployed (more than six months), as some fascinating research by economists William Dickens and Rand Ghayad of Northeastern University suggests. By their estimates, virtually all the reduction in hiring falls on this group, regardless of their other characteristics (age, education, industry experience). Many firms seem to have concluded that the long-term jobless are damaged goods.

To test this, Ghayad emailed fake resumes to hundreds of firms in response to job postings. All the fictional candidates were 2005 college graduates with identical skills; they differed only in their length of unemployment (0-12 months) and experience in the hiring industry. The long-term unemployed received few responses. In many cases, software filters apparently eliminated their applications automatically. Similarly, six months of joblessness erased the value of industry experience. Employers preferred candidates with less joblessness over those who had worked in their industry.

No doubt the economy’s future would be brighter if workers had more skills. But we shouldn’t mistake a long-term goal for a short-term problem. The idea of widespread labor shortages in an era of high unemployment seems absurd — and is. Today’s crucial scarcity is not skills. It’s confidence.